Draft Terms of reference: APPG Inquiry into the capacity and capabilities of HMRC

CoVi (co-Secretariat of the APPG on Responsible Tax)

[Draft] Terms of reference: Inquiry into the capacity and capabilities of HMRC

Three main areas of investigation:

Does HMRC have the right strategy, people, structures, leadership and resource allocation to:

Serve everyday individual taxpayers and businesses now?

Deal effectively with aggressive avoidance and evasion?

Deliver on a digital tax future?

Serving the needs of everyday taxpayers & businesses

HMRC has received sustained scrutiny about the difficulty taxpayers have in interacting with their services. Waiting times on helplines, errors in written correspondence the complexity of interacting online are consistently highlighted as areas of concern. HMRC has taken steps to improve customer service (link) but there are still questions around the effectiveness of this investment and the progress HMRC is making in improving its service for normal taxpayers.

Plans for personal digital tax accounts and implementation of the business tax roadmap have the potential to radically improve the experiences of everyday taxpayers, but what lessons about past customer experience can be learnt and implemented into these planned reforms to prevent the same mistakes from being made?

Submissions may include responses to the following:

Is the HMRC strategy for improving customer experience fit for purpose?

What are the average experiences of taxpayers interacting with HMRC?

How could this be improved?

What are the average waiting times for different queries on HMRC helplines?

What is the evidence that HMRC’s approach has led to any recent improvement in performance?

How is HMRC spending the extra money it was allocated at Budget 2016?

What has been the effect of online chat functions for simple HMRC queries?

What will the impact of the planned reorganisation of 170 regional HMRC offices to 13 ‘hubs’ have on customer service?

What is the effect of past and planned job cuts on HMRC customer service?

Are enough staff in HMRC skilled appropriately to deal with more complex tax queries?

Dealing effectively with aggressive avoidance and evasion

The level of public interest in aggressive tax avoidance and evasion remains significant, with LuxLeaks and Panama Papers highlighting the scale of the challenge HMRC and other revenue bodies around the world face. HMRC received 86,000 separate leads in 2015, ranging from local concerns, to commercial avoidance to intelligence that helps HMRC take down criminal gangs.

Does HMRC have the right strategy, people, structures, leadership and resource allocation to tackle aggressive avoidance and evasion? This question builds on the work and lessons learnt from the APPG’s first inquiry into BEPs.

Submissions may include responses to the following:

Are more attractive international rates of taxation for business and individuals having an effect on compliance?

Are new deterrence measures and penalties having an effect on compliance?

What is the actual size of the tax gap?

How effective will the cross Government taskforce comprising of HMRC, FCA, NCA & SFO analysts be in investigating the Panama papers? Do they have the right leadership, structures, people and resources to be as effective as they can be?

How will this taskforce update Parliament on its progress? And in what way?

Is HMRC using the automatic sharing of information effectively?

What is the backlog on dealing with avoidance cases?

HMRC pursues cases which it has a high degree of certainty of winning. Is this in the public interest or should HMRC pursue more cases? What is an appropriate threshold?

How is HMRC’s ‘gateway’ of sharing information on suspected tax avoiders working?

Are HMRC predictions of what they recover accurate? What is their performance record?

How effective is HMRC at working with other tax jurisdictions on pursuing complex cases?

Is HMRC showing international leadership?

Is the ‘Connect’ HMRC database of intelligence being used most effectively?

What is the return on investment of counter avoidance? How does this compare to other tax jurisdictions?

Delivering a digital tax future

HMRC and HMT have ambitious plans to digitally ‘transform the tax system, so that it is more effective, more efficient and easier for taxpayers’.

The Government say that by 2020, HMRC will have moved to a fully digital tax system where:

bureaucratic form-filling is eradicated — taxpayers should never have to tell HMRC information it already knows;

unnecessary time delays are eliminated — the tax system operates much more closely to ‘real time’, keeping everyone up to date and removing the risk of missed deadlines, unnecessary penalties, debts arising and errors in the system being carried forward from one year to the next; and

taxpayers have access to digital accounts — with the information HMRC needs automatically uploaded, bringing an end to the tax return.

Submissions may include responses to the following:

Large Government IT projects have a patchy record at best, including the recently cancelled HMRC Aspire project. How confident can HMRC be that this project will be different?

What provisions are being made for the digitally excluded, or less able to use digital?

Is digital intended to avoid making substantive efforts to simplify the tax system? With the longest tax code in the world is it possible to digitise the administration of the UK tax system without substantial simplification?